Glossary

Master-Feeder Fund Structure

Also known as: Master-feeder structure

A fund architecture in which multiple investor-facing 'feeder' vehicles, each organized to suit a different investor category (domestic taxable, U.S. tax-exempt, foreign), aggregate capital into a single underlying 'master' vehicle that makes all portfolio investment decisions, allowing operational and investment consolidation without forcing every investor into an identical tax posture.

The master-feeder structure exists to solve a specific tension in institutional real estate fund formation: a single fund vehicle rarely suits every category of investor optimally from a tax perspective, since a domestic taxable investor, a U.S. tax-exempt investor concerned about UBTI, and a foreign investor concerned about FIRPTA and ECI each have different structuring needs, yet the manager wants to run one unified investment program rather than several parallel, operationally duplicative portfolios. The typical solution routes each investor category into its own feeder — a domestic feeder for taxable U.S. investors, and an offshore (or blocker-inclusive) feeder for foreign and tax-exempt investors, with the offshore feeder often itself holding U.S. investments through a blocker corporation to shield its investors from direct ECI and FIRPTA exposure — with all feeders investing side by side into the same master partnership, which then makes every underlying real estate acquisition and holds every asset. Because the feeders sit above the master rather than owning assets directly, portfolio management, reporting, and typically fee calculation are consolidated at the master level even though economic terms, tax treatment, and sometimes currency denomination can differ meaningfully feeder by feeder, which is why master-feeder structures are especially common for global real estate fund platforms raising capital simultaneously from U.S. taxable, U.S. tax-exempt, and non-U.S. investor bases.